This circular provides clarification on the process for recovery of arrears arising from wrongly availed CENVAT credit under the pre-GST laws and CENVAT credit incorrectly carried forward as transitional credit into the GST regime.

It reiterates that arrears related to the existing law are to be recovered as central tax liability under GST. Such liability is required to be discharged by utilising the balance available in the electronic credit ledger or electronic cash ledger of the registered person, and the recovery is to be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01).

Since the functionality to record this liability directly in the electronic liability register was not available on the common portal at the relevant time, the circular prescribes an alternative method. Taxpayers are required to reverse the wrongly availed CENVAT credit and inadmissible transitional credit through Table 4(B)(2) of FORM GSTR-3B. Any applicable interest and penalty on such reversals are also required to be paid and reported through column 9 of Table 6.1 of FORM GSTR-3B.

These clarifications are issued to ensure uniform recovery practices across field formations and to provide procedural certainty to taxpayers in respect of legacy credit issues under GST.